Red tape burden on rise, claim companies

Tax-related red tape is increasing, making the UK a less appealing country in which to do business, according to large firms.

A poll taken on behalf of the Revenue found that 64% of companies surveyed believe the administrative burden of tax compliance has risen over the past 12 months, while at the same time HMRC have become less transparent in their decision-making.

Almost one-third of large companies (30%) said the perceived surge in Revenue bureaucracy had a negative effect on the UK’s competitiveness, and around one in five (18%) claimed they had considered relocating all or part of their organisation abroad to a country with less burdensome tax system.

‘If only a small fraction of those companies that have considered relocating did relocate abroad it would decimate the UK’s tax revenues,’ warned Roy Maugham, tax partner with accountancy group UHY Hacker Young.

‘While the Treasury might feel that deficit reduction means it cannot cut business taxes too quickly, there is also a risk to the country’s finances from having a tax system that is uncompetitive compared to places like Ireland. UK companies feel that they are the goose that has been well and truly plucked by HMRC and the Treasury.’

Of the firms polled, only 2% felt there was less red-tape wrapped around tax compliance than there was a year previously.

‘This is a poor result, as you would expect that HMRC would want to provide large companies with a blue riband treatment,’ said Mr Maugham, who noted that 36% of respondents rated the taxman’s service as very good in 2009, down from 43% in 2008 – and just 4% agreed strongly with the statement, ‘HMRC resolve disagreements within an appropriate time period’.

There were also complaints about the department’s communications and transparency, with only 10% of large businesses agreeing strongly with the statement that ‘HMRC make it clear what you need to do to address any concerns’: a fall from 15% last year.

However, none of the firms surveyed suggested that the Revenue’s English language abilities need urgent improvement.

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